The UK’s Financial Conduct Authority (FCA) has raised an alarm concerning a new wave of fraudulent activities where individuals are being targeted by scammers posing as car finance lenders.
These impostors are falsely claiming that victims are entitled to compensation, following the FCA’s announcement of a consultation on a potential car finance compensation scheme.
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The regulator said: “Following our announcement that we’ll consult on a potential car finance compensation scheme, we’ve received reports of scammers contacting people.”
According to the FCA, there is currently no such scheme in effect, but that hasn’t stopped fraudsters from attempting to deceive consumers by requesting their details under the guise of compensatory claims.
The scammers are reaching out to individuals, seeking sensitive information such as names, addresses, dates of birth, and banking details, under the pretence that they are due for compensation.
The FCA has advised the public to be cautious and to terminate any suspicious calls immediately. They have also encouraged reporting of such scam calls and texts to Ofcom, which can be done by forwarding the messages to the number 7726.
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By GlobalDataIn a statement, the FCA confirmed: “There’s no car finance compensation scheme in place yet.
“Car finance lenders are not yet contacting customers about compensation.”
This warning follows the FCA’s recent announcement that it is considering the establishment of a compensation framework for consumers who may have been affected by unfair motor finance practices.
The authority’s investigation into past motor finance agreements has revealed significant non-compliance with legal and regulatory standards by some lending companies.
The Supreme Court has clarified that while commission payments in motor finance are not inherently unlawful, certain associated practices may be considered unjust and therefore illegal.
The FCA’s forthcoming consultation will detail the procedures companies should follow to review past agreements and determine whether consumers are owed compensation.
The FCA plans to open the consultation by early October, providing a six-week window for feedback. While the details of the compensation scheme are still being finalised, the authority aims to have the definitive rules ready for implementation by 2026.
